Código Fecha Clasificación Origen
08COPENHAGEN668 16 December 2008 No clasificado Embassy Copenhagen

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R 161546Z DEC 08



E.O. 12958: N/A


REF: STATE 123907

1. Following is the 2009 Investment Climate Statement
(ICS09). ICS09 will form part of the 2009 Country
Commercial Guide for Denmark.



Denmark is characterized by political, economic and
regulatory stability. The macroeconomic environment is
sound and the investment climate is favorable. Denmark is
situated strategically, linking continental Europe with the
Nordic and Baltic countries. The transport and
communications infrastructure are efficient. Denmark is
among the world’s leaders in industries such as information
technology, life sciences, energy technology, and shipping.

A.1. Openness to Foreign Investment:

Denmark is a small country with an open economy. Denmark is
highly dependent on foreign trade and international
cooperation. Danish trade and investment policies are very
liberal and encourage foreign investment.

In general, investment policies are forward-looking and
aimed at fostering and developing businesses, especially in
high-growth sectors. According to the 2008 business
environment survey from the Economist Intelligence Unit,
Denmark has retained its position as the most attractive
nation for foreign investment. Several factors are included
in the survey and Denmark scores top marks in various
categories such as the political and institutional
environment, macroeconomic stability, policy towards private
enterprise, foreign investment policy, financing and

According to the Danish central bank, the total stock of
foreign direct investment in Denmark was Danish Kroner (DKK)
668.7 billion (current prices, exclusive of pass-through
investments) in 2007, corresponding to 39 percent of GDP.
U.S. investments of DKK 46.8 billion in Denmark accounted
for 7 percent of total FDI stock in 2007. The United States
is the fourth largest foreign investor in Denmark.

The government agency "Invest in Denmark" is part of the
Danish Trade Council and is situated within the Ministry of
Foreign Affairs. The agency provides detailed information
to potential investors. The website for the agency is
www.investindk.com. Greenland Home Rule government’s trade
promotion agency, Greenland Expo, also has information for
potential investors in Greenland. The website for the
agency is www.greenlandexpo.com.

The central and the regional governments encourage foreign
investment on a national-treatment basis.
There is no mandatory screening of foreign investment.

According to the Danish Competition Act, the Competition
Authorities require notification of mergers and takeovers if
the combined turnover of the participating companies exceeds
DKK 50 million. However, notification is not required if
only one of the participating companies has turnover of more
than DKK 10 million. The EU Commission must approve very
large mergers.

There are certain restrictions on foreigners’ acquisition of
real estate in Denmark. EU citizens and companies from EU
member states can purchase any type of real estate (except
vacation properties) without prior authorization from the
authorities. However, companies not domiciled in the EU and
non-EU citizens who are not living in Denmark or have not
previously been living in Denmark for at least five years in
total, can only acquire real estate with the permission of
the Danish Ministry of Justice. Permission is freely given
to people with a Danish residency permit, except with regard
to purchases of vacation properties. Purchases of
designated vacation properties are restricted to citizens of

See section A.6. regarding limits on foreign ownership and
control in certain sectors.

A.2. Conversion and Transfer Policies:

Denmark has not introduced the Euro currency although it
meets the EU’s economic criteria for membership. Danish
voters twice (in 1992 and 2000) turned down the introduction
of the Euro. The Danish reservation concerning Euro
participation can only be abolished by referendum. Although
the current government has broached the possibility of
holding another referendum on Euro adoption, a referendum
has not yet been scheduled.

Denmark conducts a fixed exchange rate policy with the
Danish Kroner linked closely to the Euro within the
framework of ERM II. The Danish Kroner has a fluctuation
band of +/- 2.25 percent of the central rate of DKK 746.038
per 100 Euro.

There are no restrictions on converting or transferring
funds associated with an investment into or out of Denmark.
Policies are intended to facilitate the free flow of capital
and to support the flow of resources in the product and
services markets.

Foreign investors can obtain credit in the local market at
normal market terms, and a wide range of credit instruments
is available.

A.3. Expropriation and Compensation:

By law, private property can only be expropriated for public
purposes, in a non-discriminatory matter, with reasonable
compensation, and in accordance with established principles
of international law. There have been no recent
expropriations of significance in Denmark and there is no
reason to believe that there may be significant
expropriations in the near future.

A.4. Dispute Settlement:

There have been no major disputes over investment in Denmark
in recent years. The judicial system is extremely well-
regarded and fair. The legal system is independent of the
legislative branch of the government and is based on a
centuries-old legal tradition. It includes written and
consistently applied commercial and bankruptcy laws, and
secured interests in property are recognized and enforced.
The World Economic Forum’s 2008-2009 Global Competitiveness
Report, which ranks Denmark as the world’s third most
competitive economy, characterizes Denmark’s judicial system
as a notable competitive advantage. Denmark is ranked as
the country with the world’s most efficient legal framework.
In addition, Denmark ranks highly among the evaluated
countries for its protection of property rights (#2) and
intellectual property protection (#3).

Monetary judgments under the bankruptcy law are made in
freely convertible Danish Kroner. The bankruptcy law
addresses creditors’ claims against a bankruptcy in the
following order: (1) costs and debt accrued during the
treatment of the bankruptcy; (2) costs, including the court
tax, relating to attempts to find a solution other than
bankruptcy; (3) wage claims and holiday pay; (4) excise
taxes owed to the government; and (5) all other claims.

Denmark is a member of the International Center for the
Settlement of Investment Disputes (ICSID) and is a party to
the 1958 Convention on the Recognition and Enforcement of
Foreign Arbitral Awards. Subsequent Danish legislation
makes international arbitration of investment disputes
binding in Denmark. In addition, Denmark is a party to the
1961 European Convention in International Commercial
Arbitration and to the 1962 agreement relating to the
application of this Convention.

A.5. Performance Requirements/Incentives:

Denmark adheres to the WTO Agreement on Trade-related
Investment Measures (TRIMs) and performance requirements are
applied only in connection with investment in hydrocarbon
exploration, where concession terms normally require a fixed
work program, including seismic surveys, and in some cases
exploratory drilling, consistent with applicable EU

Performance requirements are mostly designed to protect the
environment, mainly through encouraging reduced energy and
water use. Several environmental and energy requirements
are systematically imposed on households as well as
businesses in Denmark, both foreign and domestic. For
instance, Denmark was the first of the EU countries, in
January 1993, to introduce a carbon dioxide (CO2) tax on
business and industry. However, there are certain
reimbursement schemes and subsidy measures to reduce the
costs for businesses, thereby safeguarding Danish

Performance incentives are available to both foreign and
domestic investors. For instance, investment by foreign and
domestic investors in designated regional development areas
may take advantage of certain grants and access to
preferential financing. Investments in Greenland may be
eligible for incentives as well.

Denmark does not offer favored treatment to foreign
investors. Foreign subsidiaries located in Denmark can
participate in government-financed or subsidized research
programs on a national-treatment basis.

A.6. Right to Private Ownership and Establishment:

A foreign or domestic private entity may freely establish,
own, and dispose of a business enterprise in Denmark. The
capital requirement for establishing a corporation (A/S) is
DKK 500,000 (approximately USD 90,000 per mid-December 2008
exchange rate) and for establishing a private limited
liability company (ApS) DKK 125,000 (approximately USD
22,700). No requirements apply as to the residency of
directors and managers of A/S or ApS.

Since October 2004, a private entity may found a European
public limited company (SE company). The legal framework of
the SE company is to a large degree subject to national
company law, but it is possible to change the nationality of
the company without liquidation and re-founding. An SE
company must be registered at the Danish Commerce and
Companies Agency if the official address of the company is
in Denmark. The minimum capital requirement is EUR 120,000.

Like most other countries, Denmark imposes restrictions on
establishing companies providing professional services
(e.g., legal, accounting, auditing, and medical services) in
Denmark. Danish professional certification and/or local
Danish experience to practice in Denmark are required. In
some instances, Denmark may accept an equivalent
professional certification from other EU or Nordic countries
on a reciprocal basis.

Establishment of new, large department stores outside city
centers is on a non-discriminatory economic needs-test basis
and has to be approved by the local authorities.

Ownership restrictions are applied in the following sectors:

Hydrocarbon exploration: Requires 20 percent Danish
government participation, but on a "non-carried interest"

Defense materials: Amendments to the legislation concerning
foreign ownership of defense companies came into effect as
of July 2006. The new law (L503 of July 6, 2006) replaces
previous ownership restrictions with control. The Minister
of Justice has to approve foreign ownership of more than 40
percent of the equity or more than 20 percent of the voting
rights in a defense company doing business in Denmark. The
approval will be granted unless there are foreign policy
considerations or security issues weighing against approval.

Aircraft: Unless a waiver is granted, non-EU physical and
legal persons may not directly own or exercise control over
aircraft registered in Denmark.

Ships registered in the Danish International Ships Register
(DIS) must, as a general rule, be Danish-owned. Ships owned
by Danish citizens, Danish partnerships or Danish limited
liability companies are eligible for registration.
Furthermore, ships owned by EU or EEA entities with a
genuine link to Denmark are eligible for registration.
Also, foreign companies with a major Danish influence can
register a ship in the DIS.

A.7. Protection of Property Rights:

Property rights in Denmark are well-protected by law.
Intellectual property protections in Denmark are
particularly well-regarded. Denmark adheres to key
international conventions and treaties concerning protection
of property rights. The WTO Agreement on Trade Related
Aspects of Intellectual Property Rights (TRIPS) has been
ratified. The WIPO internet treaties: WIPO Copyright
Treaty (WCT) and WIPO Performances and Phonograms Treaty
(WPPT), have been signed but not yet ratified because
Denmark is awaiting a joint EU ratification process.

Real estate is for the most part financed through the well-
established Danish mortgage bond credit system, the security
of which almost compares to that of government bonds.

However, to comply with the covered bond definition in the
EU Capital Requirements Directive (CRD), the Danish mortgage
banking regulation was amended effective July 1, 2007.

With the amended Danish mortgage banking regulation,
commercial banks now have the same opportunities as mortgage
banks and ship-financing institutions to issue covered
bonds. Only issuers that have been granted a license from
the Danish financial supervisory authority are able to issue
Danish covered bonds.

Secured interests in property are recognized and enforced in
Denmark. All mortgage credits in real estate are recorded
in local public registers of mortgages. Except for
interests in cars and commercial ships, which are also
publicly recorded, other property interests are generally
unrecorded. The local public registers are reliable system
of recording security interests.

A.8. Transparency of the Regulatory System:

Danish laws and policies granting national treatment to
foreign investments are designed to support the Danish goal
of increasing FDI in Denmark.

Denmark applies high standards with regard to health,
environment, safety, and labor laws. These policies are
universally applied and are not used to impede foreign

Danish corporate law is generally in conformity with current
EU legislation.

The legal, regulatory and accounting systems are relatively
transparent and in accordance with international standards.

Bureaucratic procedures are streamlined and transparent, and
proposed laws and regulations are published in draft form
for public comment.

In June, 2007, the Danish Parliament enacted a major bill on
Controlled Foreign Company (CFC) taxation and private equity
funds. The bill reduced the corporate tax rate from 28
percent to 25 percent. The bill also limited tax
speculation for private equity funds. Additionally, the bill
capped deductibility of net financing costs and changed
taxation of dividend and liquidation distributions.

Furthermore, the Bill included amendments to the taxation of
CFCs indirectly forced upon the Danish government by a
European Court of Justice (ECJ) ruling in the British
Cadbury-Schweppes case. The Danish rules now include
specific criteria for when CFC taxation will be triggered,
such as the relative size of financial assets and CFC

A.9. Efficient Capital Markets and Portfolio Investment:

Denmark has fully liberalized foreign exchange flows,
including those for direct and portfolio investment
purposes. Credit is allocated on market terms and is freely

The Danish banking system is under the regulatory oversight
of the Financial Supervisory Authority. Like banks in many
other countries, Danish banks experienced significant
turbulence in 2008. Two small/mid-sized banks failed, and
other banks merged to avoid collapse. In October 2008, the
Danish Parliament passed legislation that calls for all
private banks and the Danish government to jointly finance a
"safety net" program that provides unlimited guarantees for
bank deposits and certain classes of bank creditors through
September 2010. In spite of this legislation, in late 2008
some local businesses reportedly complained of tight lending
practices and a difficulty in obtaining bank financing.

A possible barrier for foreign banks in Denmark is that the
national payment system, PBS, is jointly owned by Danish
banks and that it is difficult for foreign banks to gain
access. The assets of the three largest Danish banks,
Danske Bank, Nordea Bank Danmark, and Jyske Bank, comprise
approximately 75 percent of the total assets in the Danish
banking sector. The major Danish banks are rated by
international agencies and the creditworthiness is very high
by international standards.

Differentiated voting rights - A and B stocks - are used to
some extent and several Danish companies are controlled by
foundations, which can restrict potential hostile takeovers
including foreign takeovers.

The Danish stock market functions efficiently and in 2005,
the Copenhagen Stock Exchange became part of the integrated
Nordic and Baltic market place, OMX Exchanges, headquartered
in Stockholm. Besides Stockholm and Copenhagen, OMX also
includes the stock exchanges in Helsinki, Tallinn, Riga and
Vilnius. In order to increase the access to capital for
primarily small companies, the OMX in December 2005 opened a
Nordic alternative marketplace — "First North" — in

A.10. Political Violence:

Denmark is a politically stable country. Incidents
involving politically-motivated damage to projects or
installations are very rare in Denmark.

A.11. Corruption:

According to the 2008 Corruption Perceptions Index by
Transparency International, Denmark is the least corrupt
country in the world. Transparency International has local
representation in Denmark.

Corruption is covered under the Danish Penal Code and the
Ministry of Justice is responsible for combating corruption.
Penalties for violations range from fine to imprisonment of
up to four years for a private individual’s involvement and
up to six years for a public employee’s involvement. Since
1998, Danish businesses cannot claim a tax deduction for the
cost of bribes paid to officials abroad. Denmark is a
signatory of the OECD Convention on Combating Bribery.

A.12. Bilateral Investment Protection Agreements:

Denmark has concluded investment protection agreements with
the following 46 countries: Algeria, Albania, Argentina,
Belarus, Bolivia, Bulgaria, Czech Republic, Chile, China,
Croatia, Egypt, Ethiopia, Estonia, Ghana, Hong Kong,
Hungary, India, Indonesia, Kuwait, Latvia, Lithuania,
Malaysia, Mexico, Mongolia, Mozambique, Nicaragua, North
Korea, Pakistan, Peru, the Philippines, Poland, Romania,
Russia, Slovakia, Slovenia, South Korea, Sri Lanka, South
Africa, Tanzania, Tunisia, Turkey, Uganda, Ukraine,
Venezuela, Vietnam, and Zimbabwe. Further, Denmark has
signed Investment Protection Agreements with Bosnia
Herzegovina, Brazil, Cuba, Laos, and Morocco, but these
agreements await ratification.

The U.S.-Danish Bilateral Convention for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with
Respect to Taxes on Income was concluded in 1999 and came
into force on March 31, 2000. In May 2006, a protocol was
signed to amend the existing tax treaty between Denmark and
the United States. The most important aspect of the
protocol relates to the elimination of withholding tax on
cross-border dividend payments.

A.13. OPIC and Other Investment Insurance Programs:

OPIC programs are not applicable to U.S. investments in
Denmark, but may be used by at least 95 percent U.S.-owned
subsidiaries in Denmark to support their investments in
qualifying countries.

Denmark is a member of the Multilateral Investment Guarantee
Agency (MIGA).

A.14. Labor:

The Danish labor force is generally stable, well-educated
and efficient. Language skills are good and English is
considered a natural second language among a very high
proportion of Danes. Furthermore, the Danish labor market is
flexible. Danish rules on the hiring and firing of
employees are not burdensome, which enables employers to
adjust the workforce quickly to changing market conditions.

The Danish labor force amounts to approximately 2.9 million
persons. Denmark’s EU-harmonized unemployment rate was
about 3 percent in 2008, which is very low both historically
as well as compared to the EU and OECD averages. There are
labor market pressures in various parts of the manufacturing
and the services sector as well as in the construction

The public sector in Denmark is large and accounts for
approximately 36 percent of the employment at full-time

The labor force participation rate for women is among the
highest in the world. In 2008, almost 75 percent of
working-age women participated in the labor force and the
employment rate was 71 percent. The male labor
participation rate and employment rate were 82 and 79
percent respectively.

The Danish labor force is highly organized, with
approximately 80 percent belonging to a union. However,
labor disputes and strikes occur only sporadically. As a
general rule, labor/management relations are excellent,
based on dialogue and consensus rather than confrontation.
Working conditions are laid down in a rather complex system
of legislation and organizational agreements. Many aspects
of wage and working conditions are determined through
collective bargaining rather than regulated by legislation.

The contractual workweek for most wage earners is 37 hours.
By law, employees are entitled to five weeks of paid annual
leave. However, the majority of the labor force has the
right to six weeks of paid annual leave through labor market

Denmark has well functioning unemployment insurance and sick
pay schemes, which are not financed by employers. Maternity
leave in Denmark is 52 weeks and employers are obliged to
pay salary for at least 14 weeks.

Danish wages are high by international standards, and have
contributed to the use of capital-intensive technologies.
However, employer contributions to social security
(including health care) are very low. As a result, total
employee costs for employers are lower in Denmark than in
many other industrialized countries.

In general, work permits are not difficult to obtain for
foreign managerial staff. However, permits for non-
managerial workers from countries outside the EU (citizens
of EU countries do not require work permits) and the Nordic
countries are granted only if substantial professional or
labor-related conditions warrant it.

Special rules, detailed in the so-called Job Card Scheme,
apply to certain professional fields experiencing a shortage
of qualified manpower. Foreigners who have been hired in
the designated fields will be immediately eligible for
residence and work permits. In 2008, professions covered by
the Job Card Scheme include engineers, scientists, doctors,
nurses, IT specialists, economists, lawyers and accountants.
The Job Card Scheme extends to positions with an annual pay
of DKK 450,000, regardless of the field or specific nature
of the job.

Denmark also introduced a Green Card scheme to issue six-
month residence permits to foreign nationals, allowing
them to seek employment in Denmark. Permits are issued
based on an individual evaluation using a point system.
However, a residence permit issued under the Green Card
scheme is not a work permit. If offered a job, the
applicant must apply for a work permit. A work permit is
only granted for research and specialist positions, as well
as positions covered by the above-mentioned Job Card scheme.
Generally, personal income tax rates in Denmark are among
the highest in the world. However, foreign employees and
researchers may be subject to a favorable 25 percent gross
tax rate in the first three years of working in Denmark.
Compared with the general Danish progressive income tax
system, this is an attractive incentive. Further
information can be obtained from the Danish embassies or
from the Danish Immigration Service (www.nyidanmark.dk).
Denmark adheres to the ILO conventions protecting worker

A.15. Foreign Trade Zones/Free Ports:

The only free port in Denmark is the Copenhagen Free Port,
which is operated by the Port of Copenhagen. The Port of
Copenhagen and the Port of Malmo (Sweden) in 2001 merged
their commercial operations, including the free port
activities, in a joint company named CMP. The facilities in
the free port are mostly used for tax-free warehousing of
goods imported, for exports, in transit trade and for
distribution. Tax and duties are not payable until cargo
leaves the Free Port. Also, the processing of cargo, for
example, and the preparation and finishing of imported
automobiles for sale, can freely be set up in the Free Port.
Manufacturing operations can be established with the
permission of the customs authorities, which is granted if
special reasons exist for having the facility in the Free
Port area. The Copenhagen Free Port welcomes foreign
companies establishing warehouse and storage facilities.

A.16. Foreign Direct Investment Statistics:

The total stock of FDI in Denmark corresponded to 39 percent
of GDP in 2007 (current prices, exclusive of pass-through
investments). Conversely, Danish investment abroad
comprised 47 percent of GDP in 2007. The largest foreign
investor in Denmark is Sweden followed by Luxembourg, the
Netherlands and the United States. U.S. investment
accounted for 9 percent of the total 2006 FDI stock in
Denmark, but declined to 7 percent in 2007 due in part to a
weakened U.S. dollar.

Major U.S. direct investment in Denmark is in
telecommunications, information technology, biotechnology,
oil exploration, financial services and facility services.
During recent years, several U.S.-based private equity funds
have invested in Danish firms, such as ISS, the Legoland
Parks, and TDC.

Approximately 375 U.S. companies have subsidiaries in
Denmark, of which several are regional headquarters.

The main destinations for Danish FDI are Sweden (12
percent), Norway (10 percent), the United States (9
percent), and Germany (8 percent). The EU held 55 percent
of the stock in 2007.

Following are tables for foreign direct investment at
current prices. Pass-through investments are not included
since they have no or very little real-economic significance
for the pass-through country. The source of data is the
Danish Central Bank, www.nationalbanken.dk, based on end-
year exchange rates of DKK 5.66 = 1 USD in 2006 and DKK 5.07
= 1 USD in 2007.

Foreign Direct Investment in Denmark

Table 1. FDI in Denmark, STOCK

2006 2007
Total DKK, billions 633.6 668Q
Total USD, billions Q Q 111.6 131.7
 % of GDP 38% 39%
 % of Total, Origin: 2006 2007

USA 9% 7%

EU 71% 72%
- Sweden 23% 25%
- Luxembourg 12% 11%
- Netherlands 9% 10%
- United Kingdom 8% 8%
- Germany 5% 5%

Norway 6% 6%

% of Total, Sector: 2006 2007
(Sector of the Danish enterprise)

Agriculture, Fisheries, 3% 3%
Raw Materials

Manufacturing 14% 14%

Energy and water supply, 2% 2%
and construction

Trade, Hotels, etc. 16% 15%

Transport, Post,
Telecommunication 9% 11%

Financial Intermediation 17% 15%

Business Service 32% 32%

Danish Direct Investment Abroad

Table 2. Danish Direct Investment Abroad, STOCK

2006 2007

Total DKK, billions 731.2 795.2
Total USD, billions 129.2 157.0
% of GDP 45% 47%

% of Total, Destination: 2006 2007

USA 9% 9%

EU 61% 55%
- Sweden 13% 12%
- France 4% 4%
- Netherlands 6% 5%
- United Kingdom 9% 8%
- Germany 11% 8%

Norway 8% 10%

% of Total, Sector: 2006 2007
(Sector of the Danish enterprise)

Agriculture, Fisheries, 6% 6%
Raw Materials

Manufacturing 23% 22%

Energy and Water Supply, 2% 2%
and construction

Trade, Hotels, etc. 10% 9%

Transport, Post,
Telecommunication 15% 15%

Financial Intermediation 8% 10%

Business Service 29% 29%

Major FDI in Denmark by U.S. companies:

Microsoft IT
HP/Compaq IT
Intel IT
Computer Sciences Corp., USA IT
ADC Telecommunications Inc. IT
Motorola Telecom
Texaco Energy
Amerada Hess Hydrocarbon exploration
Ashland Road Construction
Masco Furniture and Sanitary
York Holding Corp. Refrigerating Equipment
Tenneco Inc. Automotive
3M Tapes, Health Care and
Pfizer Pharmaceuticals
Merck, Sharp & Dohme Pharmaceuticals
Eli Lilly Pharmaceuticals
Sauer Inc. Fluid Power
CP Kelco Hydrocolloids
Doane Pet Care Co. Pet Food
GE Capital Financial Services
Biogen IDEC Biotechnology

Among the biggest U.S. corporate takeovers in Denmark are
Microsoft’s acquisition of the Danish software company
Navision in 2002 (USD 1.2 billion) and IBM’s acquisition of
Maersk Data in 2004 (estimated USD 400 million).

In May 2007, Greenland Home Rule and Alcoa signed a
memorandum of understanding to study the feasibility of the
construction of an aluminum smelter and associated
hydropower generation and transmission facilities in
Greenland. Upon completion, the Alcoa investment (estimated
USD 2.5 billion) would be the largest U.S. direct investment
ever in the Kingdom of Denmark. U.S. companies ExxonMobil
and Chevron also own approximately 48 percent of a
partnership that, in October 2007, was awarded licenses for
the exploration and exploitation of hydrocarbons off the
coast of Western Greenland.

Other FDIs in Denmark mostly come from Denmark’s neighboring
countries or other nearby countries, including Sweden,
Iceland, Norway, Finland, Germany, and the United Kingdom.
Most of those nations’ major companies, and numerous smaller
ones, have a presence in Denmark, either as regional
headquarters, sales/marketing offices or in production.
Some foreign companies with large investments in Denmark are
Statoil (Norway); L.M. Ericsson (Sweden); Nordea (Sweden);
Vattenfall (Sweden), APV (United Kingdom); Bayer (Germany),
and Q8 Oil (Kuwait).